Although caveolin-1 is thought to facilitate the interaction of receptors and signaling components, its role in epidermal growth factor receptor (EGFR) signaling remains poorly understood. Ganglioside GM3 inhibits EGFR autophosphorylation and may thus affect the interaction of caveolin-1 and the EGFR. We report here that endogenous overexpression of GM3 leads to the clustering of GM3 on the cell membrane of the keratinocyte-derived SCC12 cell line and promotes co-immunoprecipitation of caveolin-1 and GM3 with the EGFR. Overexpression of GM3 does not affect EGFR distribution but shifts caveolin-1 to the detergent-soluble, EGFR-containing region; consistently, caveolin-1 is retained in the detergent-insoluble membrane when ganglioside is depleted. GM3 overexpression inhibits EGFR tyrosine phosphorylation and receptor dimerization and concurrently increases both the content and tyrosine phosphorylation of EGFR-associated caveolin-1, providing evidence that tyrosine phosphorylation of caveolin-1 inhibits EGFR signaling. Consistently, depletion of ganglioside both increases EGFR phosphorylation and prevents the EGF-induced tyrosine phosphorylation of caveolin-1. GM3 also induces delayed serine phosphorylation of EGFR-unassociated caveolin-1, suggesting a role for serine phosphorylation of caveolin-1 in regulating EGFR signaling. These studies suggest that GM3 modulates the caveolin-1/EGFR association and is critical for the EGF-induced tyrosine phosphorylation of caveolin-1 that is associated with its inhibition of EGFR activation.